Locking yourself into price competition is a losing proposition. If you're providing value, your customers may even be willing to pay more.
I read a funny urban legend the other day about an apocryphal statement by a former astronaut. The comment went something like this: "It really makes you think when you realize you are hurtling through space in a craft built by the lowest bidder!"
People have some interesting notions about what constitutes value. If they pay a lot for something, they think they've either purchased a high-quality product or just gotten ripped off. Stuff with bargain-basement prices is considered... well... bargain basement. Find a high-quality product at a substantially reduced price, and, hey, you've just found value!
Just in case you're thinking this doesn't apply to your Web site or your industry, think again. Value is the key determining factor in all purchases, for both consumers and businesses. There are always "price shoppers," and they are a minority. Additionally, price shoppers are notoriously disloyal, so unless you have an overwhelming competitive pricing advantage, you are destined to lose out to those with deeper pockets and more staying power.
The notion that value online is all about price prevails, even though that concept was proved incorrect in the offline world long ago. Sure, you might get lucky and make a few sales based alone on a super-discounted price. But if that's all you're offering, you're building zero loyalty, and you're begging for competition. If you want lots of delighted, loyal, repeat customers, you have to realize superior value goes way beyond price and it's superior value that keeps customers coming back.
You are not just offering your customers a price proposition; you are actually offering them a value proposition. It's a complete package, filled with lots of human-friendly usability elements: attractive but fast-loading and functional design, great information, great products, appropriate prices, and top-notch customer service, plus plenty of nice, little guaranteed-to-make-them-smile extras you devise to set yourself apart from competitors that just offer, well, a low price.
Think this new medium isn't about sustainable value? Then have a look-see at the results of an MIT study of online buying that discovered "only 47 percent of the consumers... bought from the lowest-priced seller... In fact... price was the least important factor." And what beat price? The biggest factor was whether the customer had visited the site before (see why I go on about making the right impression with your site?), followed by the company's familiarity, then shipping time (think "service").
Truth is, value is so subjective that you can often be more successful charging higher prices, provided you pay close attention to all the other factors that influence the buyer's perception of your product's value. A lot of that perception hinges on your market position. If you're selling coffee, are you a Denny's or a Starbucks?
Remember: Image alone isn't going to cut it, particularly online, where it's that much harder to enable your prospects to bask in fancy ambiance. Folks flat out require real substance, and they consistently vote with their mice.
Want to make more money? What are you doing to make the shopping experience delightful? How do your guarantees and customer service perform over the long term? How responsive are you to problems or concerns? Are your shipping policies reasonable? Do you meet expectations, fall short on them, or go way beyond?
Jay Walker, of Priceline.com fame, said: "[Successful] businesspeople engineer value equations. And they don't care whether it's about more or less cost: They only care about whether there's more or less value. And if they can charge for the value they create, that's where the successful business lies."
So, if you want real long-term success, set the issue of price aside for a moment, and take a long, close, hard look at your comprehensive value proposition. That's where the path to your goal lies.
Bryan is taking Friday off for Independence Day. Today's column ran earlier on ClickZ.
This Year's Premier Digital Marketing Event is #CZLSF
ClickZ Live San Francisco (Aug 11-14) brings together the industry's leading practitioners and marketing strategists to deliver 4 days of educational sessions and training workshops. From Data-Driven Marketing to Social, Mobile, Display, Search and Email, this year's comprehensive agenda will help you maximize your marketing efforts and ROI. Register today!
Bryan Eisenberg is coauthor of the Wall Street Journal, Amazon, BusinessWeek, and New York Times bestselling books "Call to Action," "Waiting For Your Cat to Bark?," and "Always Be Testing." Bryan is a professional marketing speaker and has keynoted conferences globally such as SES, Shop.org, Direct Marketing Association, MarketingSherpa, Econsultancy, Webcom, SEM Konferansen Norway, the Canadian Marketing Association, and others. In 2010, Bryan was named a winner of the Direct Marketing Educational Foundation's Rising Stars Awards, which recognizes the most talented professionals 40 years of age or younger in the field of direct/interactive marketing. He is also cofounder and chairman emeritus of the Web Analytics Association. Bryan serves as an advisory board member of SES Conference & Expo, the eMetrics Marketing Optimization Summit, and several venture capital backed companies. He works with his coauthor and brother Jeffrey Eisenberg. You can find them at BryanEisenberg.com.
The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.
The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.
August 21, 2014